Selected data on merchandise inventory, purchases, and sales for Gainesville Co. and Tallahassee Co. are as follows:

Instructions
1. Determine the estimated cost of the merchandise inventory of Gainesville Co. on April 30 by the retail method, presenting details of the computations.
2. a. Estimate the cost of the merchandise inventory of Tallahassee Co. on December 31 by the gross profit method, presenting details of the computations.
b. Assume that Tallahassee Co. took a physical inventory on December 31 and discovered that $358,500 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during October through December?

Transcribed Image Text:

Cost Retail Gainesville Co. $ 200,000 $ 300,000 Merchandise inventory, April 1 Transactions during April: Purchases (net) Sales 2,520,000 3,700,000 3,550,000 50,000 Sales returns and allowances Tallahassee Co. $ 300,000 Merchandise inventory, October 1 Transactions during October through December: Purchases (net) 1,800,000 2,796,000 96,000 Sales Sales returns and alowances Estimated gross profit rate 36%